Chain reaction in Inwood

Starbucks' arrival has sparked interest in the area from other major retailers.

Right after Christmas last year, a coffee shop opened in Manhattan's Inwood neighborhood. Like many other java sellers in the area, the shop touted its café con leche, a drink popular with Dominican residents. However, unlike nearby mom-and-pop businesses, the newcomer was a national brand whose name, Starbucks, has become synonymous with high-priced joe.

"It's the first Starbucks in Inwood," explained David Firestein, the Shopping Center Group partner who represented Starbucks in negotiating for its 1,400-square-foot space on the corner of Dyckman Street and Broadway. "When Starbucks comes, the likelihood of some more national companies coming probably increases." Enter the chains. Many brokers predict that Starbucks' Inwood arrival—the closest other location is a mile away, on West 181st Street—will herald the chain-ification of a neighborhood that until now had remained relatively free of affluent brands. Already, the area, located on Manhattan's northernmost tip, bounded by the Harlem and Hudson rivers, has undergone drastic changes as more high-income earners flee southern Manhattan's pricey rents for Inwood's greener pastures, which include Fort Tryon Park. From 2007 to 2012, ridership at the Dyckman Street A-line subway station rose 28%, to 2.3 million annually, according to the Metropolitan Transportation Authority. Many local retailers are already seeing higher rents as landlords take advantage of the area's gentrification. "The demographics have changed. Ten years ago, the nationals were Payless, McDonald's, GameStop—brands targeting a lower-income demographic," said Dylan Murphy, director of retail leasing at Massey Knakal Realty Services, who is marketing a space on Broadway. "Starbucks changes the dialogue, and suddenly people who wouldn't talk to me six months ago are now interested in leasing space."

Indeed, though the area is still scattered with Domino's Pizza and 99-cent stores, a few big-name banks, such as Chase and Capital One, have leased in recent years. The influx of such banks, as well as the urban professionals who frequent them, has pushed retail rents to more than $100 a square foot, with some spaces carrying an asking price of $120 a square foot—a nearly 30% increase in the past couple of years.

Pricier chains such as Chipotle and some local Asian fusion restaurants are all clamoring for Inwood outposts, while fitness brands like Blink—Equinox's lower-end label—are also sniffing around, said brokers. There is room for them. Many longtime locals are getting pushed to side streets as retail thoroughfares such as Broadway and Dyckman Street lure bigger fish. Brazen Lingerie, an underwear shop previously located on Dyckman, moved a dozen blocks and a subway stop north to Broadway and West 212th Street, where it reopened a year ago in the back of a GWB Insurance office. After a fire burned down its building on West 207th Street and Broadway in January 2012, Bread and Yoga, a cooking center and yoga studio, spent nearly two years looking for an affordable place to set up shop. Like Brazen Lingerie, it eventually found space within another retail outpost, recently opening on West 212th inside an art studio. The previous location attracted lots of sunlight and could accommodate 25 students at one time, but the new spot can barely fit 18, said Nancy Preston, a yoga instructor there.

Casting a wary eye

Ms. Preston, who moved to Inwood 13 years ago from the Upper West Side, worried about Starbucks' arrival for the potential havoc it might wreak on the neighborhood's independent retailers.

"We don't want what happened to the Upper West Side to happen to us," she said, noting that the area is already victimized by noisy nightclubs, which are also pushing up prices. "Once these big stores come and the rents go up, no longer can small businesses afford it." One local player is busy strategizing. Gus Anton, who was born and raised in Inwood, opened Park View Restaurant as a diner about a dozen years ago. After his rent doubled, Mr. Anton, whose eatery is located next door to Starbucks, knew he had to employ drastic measures to attract the new residents coming to the neighborhood. Mr. Anton closed the restaurant for eight months to renovate it, adding expensive light fixtures and exposing brick walls, and reopened it this past fall. He changed the menu to feature coffee from a roaster in Tarrytown, N.Y., pastries from SoHo's Balthazar and hot--chocolate drinks from trendy supplier Mast Brothers in Brooklyn. Though his prices are slightly lower than Starbucks', he's still not doing as much coffee business as he'd like, he said on a recent weekday morning. It's hard to attract the same brand recognition as a Starbucks billboard, he lamented. "A lot of people will drive by and say, 'Oh, a Starbucks!' and run in," he said.

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